I am @dunn. I love cilantro but understand the people that hate it. Founder and CEO @Bonobos Inc. www.bonobos.com and Founder @redswanventures www.redswan.vc.

May 25, 2013

The Oracle and the Jedi

How Great Angel Investors Can Change Your Life

In life sometimes it’s better to be lucky than good.

One of the reasons why a company makes it or doesn’t make it is because of the quality of its angel investors.

At Bonobos we have two founding angel investors. They’ve been perched on my shoulders for many years now, whispering in my ears.

One is an Oracle, one is a Jedi.

They were my lifeline in the three years before the company received venture funding. Without them, we couldn’t have gotten started, and once started, we wouldn’t have gotten anywhere. They remain my lifeline when the going gets really tough. As Isaac Newton reportedly said:

If I have seen a little further, it is by standing on the shoulders of Giants.

The Oracle schooled me on judgment, the Jedi schooled me on empathy. When it comes time to do battle, you’ll need both.

The Oracle

The first time I ever talked to the Oracle, I pitched him on an idea I’d been working on for three years. Here is the first thing that he ever said to me:

I think it’s a terrible idea.

He went on to explain, cogently, why my idea wasn’t very good. Turns out that telling someone what they’re envisioning is not good can be the beginning of a great relationship.

One of the worst things about the entrepreneurial ecosystem is we pretend to like ideas that we don’t. Potential entrepreneurs deserve our honesty. People do in general.

Two years later I wrote the Oracle a love letter, describing what I loved about him for the first two pages and then describing over the next two pages the thing I thought he was doing wrong as a new professor.

I later learned that when he got the letter he cried. Not because it had heart-wrenching content, but because the letter validated the career choice he had made to retire from VC to teach.

What I learned from the Oracle:

It’s actually not nice to not be honest with someone. It’s actually not nice to be positive about something you don’t authentically feel positive about. It’s nicer to actually have the courage to be honest, even if what you’re going to say is going to make the stomach turn in the recipient of your honesty.

What does honesty have to do with judgment?

Everything, it turns out.

Judgment is about decision making, and a person can’t improve at decision making without being iteratively honest with themselves and others.

Apply this to your life for a decade or so, and you might just find your Oracle. When you do, here is how you will know it: you will experience an honesty so uncaringly precise it will feel like one of the best forms of caring you have ever known.

The Jedi

The Jedi does not consider himself much of an early stage investor. Which is funny given that he’s the founding investor in JetBlue, one of the ten fastest companies ever to $1 billion in revenue, and that I know of at least one other angel investment he made which became a multi-billion dollar company. There are likely many more. The Jedi is too humble to brag. In fact, the Jedi has a miraculous way of deflecting all compliments that come his way.

What separates the Jedi from others is he appears to spend more time in the heads of other than he does in his own. This empathy, combined with taking the long term view on how to handle difficult situations with grace and difficult conversations with diplomacy, is what makes the Jedi seem to float above the fray.

I experienced all of these super powers in tandem when I once raised a pre-money valuation on him by 50% — while he was on vacation — in one of our follow-on rounds. In his absence I thought his deputy had committed. The Jedi saw things differently and told me he’d never seen a price change like this in forty years of investing. What followed was a didactic email from me to him so foolish in its composition that it’s now part of a business school case study of how not to treat your founding investors.

When I realized what had happened, I felt sick. I felt like I had punched myself in the stomach. I had prioritized our valuation over honoring the earliest investor into the company, and while we might have had a good debate about the price had we gotten on the phone, sending a cocky email created relationship friction that moved the conversation away from substance and toward a pissing contest I deserved to lose.

Spoken words may die, but emails live forever.

After that, the Jedi should have never spoken with me again. Instead, he coached me diplomatically through understanding that I’d been an asshole. He could have withdrawn his support for the company and sabotaged the entire round in progress. He did the opposite: he increased his support by giving me feedback I needed to hear. While he didn’t invest in that round, he did in the next one. I’m lucky to say that he’s now on my board.

What I learned from the Jedi:

While a busy day can feel short, the decisions you make even on a short day live long. Take the long view. Remember that how you handle all the conversations in which those decisions are explored, debated, and made is as important as the decisions themselves. Let someone who aggrieves you the opportunity for atonement and be gracious when the easier thing to do is to not be; you might find a stronger relationship on the other side than you might have ever imagined.

The Jedi taught me this in the most effective way you can teach someone anything — which is when he had enormous power over me, he didn’t use it to punish me. He used it to teach me. He treated me with dignity when I didn’t deserve it so that I might learn to do the same.

The Jedi is fond of saying:

Your life is really a series of conversations. Treat each one with care.

By spending more time considering the point of view of others vs. one’s own, by taking a charitable view of how they got to where they are, you are in a much better position to steer dynamics to better outcomes for everyone.

The paradox is you end up better off by caring for others first.

I’ve been following the Oracle and the Jedi wherever they lead me. If you want to follow them too, you can — thanks to Twitter. The Oracle can be followed here, the Jedi can be followed here.

The Oracle is Andy Rachleff. He is now building a company which I think could revolutionize consumer finance. It’s called Wealthfront, and it is where I invest my money. One of the amazing parts of the last decade has been being on a parallel journey with a mentor who is facing many of the same challenges that I’ve faced as a founding CEO. Most VC’s as successful as Andy are either retired,investing, or playing golf. Andy is not only giving back by teaching, but he’s the only top-tier VC in human history I know who is building a huge, disruptive company after a career in VC rather than the other way around.

The Jedi is Joel Peterson. Joel is at the helm of his investment firm Peterson Partners and serves on several boards, including Bonobos and JetBlue. Joel’s at a point in his career where he could sit back and relax. Yet he teaches tirelessly, invests aggressively, and is the patriarch of a family which includes now seven children and seventeen grandchildren. I keep trying to meet a bad apple in his family and I can’t find one, and the rigor behind why that is would amaze you.

They both teach at Stanford which is how I met them.

One of the things I admire most about Joel and Andy is that they seem to me to be as intent at being good husbands and good fathers as they are at being good angel investors.

They are as good at life as they are at business.

How rare is that.

I don’t usually mix mentors or metaphors. But when I offended the Jedi with my condescending email, I called the Oracle, looking for support for my view that if his deputy had committed to the new price, that the Jedi should honor it.

“It doesn’t matter what you think,” the Oracle explained, “this situation is now about feelings not about thoughts, and you’ve harmed an important relationship and disparaged an accomplished investor.”

He continued: “Fall on your sword. Again and again, until he forgives you.”

The conversation with the Oracle about what to do with the Jedi lasted only ninety seconds. An entire week’s of mental momentum was neutralized by the laser-strike of his advice. The Oracle’s clarity of thinking that I was the one at fault and needed to singularly atone made it crystal clear.

So I did his bidding. I apologized directly. I later flew to California and apologized in person. The thaw began.

From the experience I learned it’s the aggrieved who decide when your atonement is complete, not you.

I learned that sometimes when you’re the most wrong, you’ll be the least able to see it.

I learned you are lucky in this life if you find angels on your shoulder — the voice of judgment in one ear, the voice of empathy in the other.